Community Debt Advice Services

Olivia Blake Excerpts

Wednesday 1st December 2021 Westminster Hall

[Olivia Blake (Sheffield, Hallam) (Lab)]

It is a pleasure to serve under your chairship, Ms Bardell. I congratulate my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) on securing the debate.

As we have heard, debt has many forms and can affect anyone. However, it is particularly difficult for those on lower incomes, who are unfortunately kept in what could be seen as a debt trap, with higher levels of credit being offered. Whether it is payday loans—as we have discussed in the House many times—or online credit when people buy online, or someone simply taking on a car and a mortgage and their circumstances changing, many things can put someone in debt. While there are many reasons behind it, the impact is the same. People feel extreme stress; as my hon. Friend the Member for Kingston upon Hull West and Hessle outlined, 100,000 people a year try to take their lives as a result of debt. That is a staggering figure and we should be deeply ashamed of it.

Considering where we are now, after the pandemic, provides important context. Since 2012, household debt has risen every year. Although we have seen a sharp decline in so-called unsecured debt through the pandemic, as savings have risen and outgoings have fallen, it is clear that those aggregated figures mask deep inequalities in our society.

While people on higher incomes were four times more likely to see their family savings increase under lockdown, roughly a third of low-income households saw their savings all but depleted. Part of that inequality is explained by the hit to incomes that many people experienced through the pandemic, by either having their salaries reduced through being on furlough or losing their jobs altogether. One of the most shocking economic facts of the lockdown and the covid crisis is that the increase in the average wage was due not to actual wages increasing, but to the number of people on low wages being forced out of work.

The Government are hitting lower-income families even harder with the cut to universal credit and the increase in national insurance, all while inflation continues to soar and we see large increases in energy bills—I expect we will continue to see a sharp rise in demand for support with unmanageable debts. That is why, after engineering all this inequality, the proposal to reduce the amount of face-to-face debt advice makes absolutely no sense.

I do not need to tell Members about the huge increase in complex constituency casework that we have all seen throughout the pandemic. I do not need to even mention the importance of our constituency caseworkers or surgeries in helping our constituents. It is that detailed, face-to-face meticulous support that the new MaPS proposals will axe. As a former councillor, I know that every local authority deals with debt support differently. Some areas do not offer local assistance grants, for example. With 330 different types of local authorities, a national and regional system would struggle to understand what the full offer is in individual areas.

Some might argue that the overall spending envelope on debt advice has increased. I hope the Minister will not reach for that today, because those resources are going to national services that cannot provide the quality of support and follow-through from one-off conversations with someone in a national call centre.

I worry about access. Will the Minister confirm that calls will be free and web pages free to visit? I am concerned about access in terms of disability. As we know, some people who suffer from certain disabilities are more likely to have issues with debt. It is really important that people can access services no matter their circumstances, so I want to hear more about how the Minister will support people with disabilities and debt issues. I am also concerned about the move away from grant agreements to commercial contracts with debt advice providers. We have seen that fail repeatedly in other DWP contexts. Large outsourcing companies are very good at gaming key performance indicators, as we all know, but when it comes to providing services, the service users and staff often suffer.

MaPS needs to pause the process and rethink. Instead of handing out redundancy notices just before Christmas to some of the most highly trained staff and reducing regional wraparound face-to-face services, which all our constituents rely on, it should enter into proper consultation with debt advisers and agencies, and make sure that any future contracts are accessible at a local level. Only by including those voices and listening to organisations such as We Are Debt Advisers and trade union groups such as the Unite Debt Advice Network will we find a way forward for these services and ultimately help people in a desperate situation.